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The news articles about the foreclosure crisis going on in our country are rampant but what most of them do not relay is that the situation in Florida is many ways worse than in any other state. According to the latest statistics released by the Mortgage Bankers Association, Florida accounts for 23.7% of all foreclosures nationwide; which correlates to 466,454 homes. Not only is this the largest number of any other state, it is larger than the total number of loans in 22 other states combined. According to statistics from the Office of State Courts Administrator, as of June 30th, Florida’s courts are backed up with a caseload of 260,815 cases plus an additional 117,000 fresh cases have been filed since then. Couple that with the termination of special court funding for foreclosure cases which took effect on July 1st and it appears the crisis in Florida is only getting worse.

So how did this backlog swell to such an enormous figure? Why does it take so long for a bank to foreclose? This was not always the case, right? Before Wall Street started selling shares of stocks in pools of mortgages through a process known as securitization, foreclosures could be handled within a few months. Now, according Evan M. Rosen of Rosen & Rosen, due to the banks rush to profit and lack of proper simple documentation required in any real estate or mortgage transfer, as well as the lack of complicated documentation required as a result of the securitization process, no one knows how long some cases will take because in many instances no one can properly prove who is entitled to foreclose.

Like every other plaintiff in any civil lawsuit, the plaintiff has the burden to prove all elements of their case by a preponderance or greater weight of the evidence. In a foreclosure action, the entity entitled to foreclose must successfully prove by this standard, among other things, that they are the proper party; the entity or person actually entitled to receive payments due under the terms of the note; and/or the party entitled to foreclose. This is generally referred to as legal standing and often, the banks cannot prove they have it.

Below is a chart illustrating the time periods in the pre-foreclosure and foreclosure process in Florida as prepared by Rosen & Rosen, P.A.

PRE-FORECLOSURE TIMELINE

Day 1 Payment due, no payment made

Day 7-10 Call from lender/mortgage servicer

Day 16 Late charges begin to accrue

Day 20-25 Call and letter from lender/mortgage servicer

Day 30 Default reported to credit bureaus and lender/mortgage servicer sends second letter

Day 90+ – Any time after 90 days the entity claiming their entitlement to foreclose can file suit. In many instances, this process alone can take more than 12 months, having competent counsel to point out various deficiencies typically has the effect of lengthening this process even more.

FORECLOSURE TIMELINE

Day 1 – Complaint and Lis Pendens are filed and served with a summons on the property owner.

Day 20 A responsive pleading is due. If not filed, plaintiff moves for default judgment. With competent legal counsel, there can be a multitude of legitimate issues raised via motions, hearings, and discovery requests which would extend this time period greatly.

Day 45 60(if unrepresented by competent counsel) – Court schedules hearing for default judgment and at the hearing enters final judgment of foreclosure. By statute, the court should order the sale of the property on a specified day within 20-35 days of the order. However, sales can still lawfully take place later than 35 days and are sometimes taking many months after the order is entered.

Day 80 95(if unrepresented by competent counsel, under a more typical timeline) Notice of sale published once a week for two consecutive weeks in local publication, with last posting at least 5 days prior to sale; auction sale conducted; winning bidder applies 5% deposit from funds advanced electronically prior to sale and then pays the rest by noon the following day. Dade, Broward and Palm-Beach Counties conduct their auctions online. Certificate of sale is filed promptly after sale and right of redemption ends when certificate of sale is filed.

Day 105(if unrepresented by competent counsel, under a more typical timeline) Ten days after filing certificate of sale, certificate of title is issued title vests, no further action necessary unless property is still occupied.

Day 106 -119(if unrepresented by competent counsel, under a more typical timeline) 1 -14 days after certificate of title issues, if property still occupied, sheriff posts a notice to vacate/writ of possession.

Day 119 140(if unrepresented by competent counsel, under a more typical timeline) 1 21 days after notice to vacate, sheriff vacates the property.

If, on the other hand, the entity seeking to foreclose is not the same entity as the original mortgagee or lender, and the owner has retained competent counsel, this process can take years, if the bank is ever able to foreclose

The above is just an overview to help understand the current state of the foreclosure process. For more details or if you have any questions or comments, you are welcome to call or e-mail the author of this article for more information.

In an era where a very large portion of mortgage obligations have been securitized, foreclosure becomes an intriguing process for close examination by securitization reporters, legal counsel and related parties. In February of 2012, Lance Denha, principal attorney of the Law Offices of Lance Denha, noted that before the subprime boom, little mortgage securitization was utilized, leaving it instead to Fannie Mae and Freddy Mac. Today, the ongoing foreclosure epidemic in the U.S. continues to be a key factor in the global economic crisis and the securitization of millions of delinquent mortgages is at the forefront of the problem, says Mr. Denha.

Securitization is a complex series of financial transactions designed to maximize cash flow and reduce risk for debt originators. This is typically achieved when assets, receivables or financial instruments are acquired, classified into pools, and offered as collateral for third party investment. A typical Securitization process goes as follows: A borrower goes to a mortgage lender. The lender then finances the purchase of real estate. The borrower signs the note and mortgage or deed of trust. The original lender sells the note with hundreds or thousands of similar obligations to create a package of mortgage backed securities, which are then sold to investors as bonds. The mortgage payments are those received by an agent called a servicing company.

When a borrower defaults, the party seeking to enforce the obligation and foreclosure on the underlying collateral sometimes cannot find the note. It has been said by sophisticated attorneys in the industry that more than a third of the notes securitized have been lost or destroyed. In a decision by the Fifth District Court of Appeals on September 30, 2011 in the case of Gee v. U.S. National Association, as trustee, the court reversed a summary judgment which established that the traditional argument made by banks that the borrower defaulted so who cares if we have the right documents will no longer prevail in foreclosure actions.

This is especially the case when the judicial process is involved rather than the non judicial process reason being many defenses can be made by the defendant in a foreclosure defense case in court because at times it can be very difficult to determine the name of the holder of the note, the assignee of the mortgage, and the parties with both the legal right and standing under the Constitution to enforce notes, whether in state or federal court. Mr. Lance Denha states These cases can be highly defensible if not winnable. In Non Judicial Foreclosures whereby foreclosures are processed without court intervention, these types of foreclosures simply require certain types of notifications be sent to the homeowner and publication according to state statutory law. Homeowners should note that they have the ability and opportunity to convert these types of non judicial foreclosures into the judicial courts via filing wrongful foreclosure actions, temporary restraining orders, quiet title actions, etc. should they discover wrongdoing associated with their mortgage.

As reported by The Associated Press, foreclosure activity has surged across half of the United States. The pace is increasing after all 50 states reached a $ 25 billion settlement last month over foreclosure abuses. Many foreclosures had previously been stuck in limbo as the government investigation into foreclosure paperwork problems dragged on. The legal securitization and documentation of many of the nations five biggest mortgage lenders came into question, and is still a major point of scrutiny and legal defense.

It is highly advisable to seek legal expertise to determine the best course of action moving forward in order to gain an understanding of the particular direction best suited for the client. Lance Denha has professionally challenged foreclosures, negotiated any deficiency and sought out alternatives to foreclosure or other bankruptcy options. The Law Offices of Lance Denha has the prerequisite legal knowledge and expertise readily available to assist homeowners to stay in their homes. For further information or assistance, please call at 954-840-0770.